‘Math error’ underestimates demand for Site C's power: Ministry of Energy

The B.C. government says the Site C Joint Review Panel failed to factor in LNG when evaluating demand for the dam. Critics say the project’s economics need an independent review by the B.C. Utilities Commission.  Photo By Jonny Wakefield

The Joint Review Panel created to review Site C made "a mathematical error" when it claimed there is no pressing demand for power from a third Peace River dam, according to the ministry in charge of the project.

That's one of the points in a Jan. 30 letter from Energy Minister Bill Bennett to the Peace River Regional District, responding to a request that the controversial project be sent to an independent regulatory agency for further review.

Bennett wrote that liquefied natural gas facilities would drive more electricity demand than the Joint Review Panel accounted for. 

Whether B.C. actually needs power from the 1,100 megawatt Site C has been one of the biggest questions looming over $8.8 billion project.

In its report last May, the Joint Review Panel wrote it "cannot conclude that the power of Site C is needed on the schedule presented." The dam is expected to begin generating power in 2025.

But according to Bennett, the review panel "erred" in calculating the energy demands of LNG projects.

The review panel made its calculations based on a scenario with "no LNG load," Bennett wrote. However, BC Hydro expects LNG will need around 3,000 gigawatt-hours of new electricity a year, according to a ministry spokesperson.

The panel settled on 800 gigawatt-hours a year as the likely LNG demand, but failed to include that number in calculations, the ministry said.

In an email, a ministry spokesperson said the panel "inadvertently failed to include [800 gigawatt-hours of LNG demand] in the summation column" of its calculation.

With 800 gigawatt-hours of new demand, "there would be a need for new capacity in 2019 and new energy in 2024," Bennett wrote.

"When the [panel's] mathematical error is corrected by adding the low LNG load into its analysis, it shows that Site C is in fact needed on the timetable that BC Hydro had set forth," the ministry spokesperson wrote. "Under the expected LNG scenario there is a need for new energy resources earlier than Site C's in-service date."

While the panel later admitted the mistake in a followup publication, panelists wrote that its "conclusions remain as noted."

Regional District Director Karen Goodings said the letter makes "pretty clear" that Site C is moving forward with LNG in mind.

"We started off having to build Site C for residential use," she said. "This is not residential use. They want to build Site C at a huge cost, and it's based on an industry that, to my way of thinking, may or may not happen."

An opposition critic also questioned BC Hydro's numbers.

Because the panel used the Crown corporation's figures, demand and cost projections for Site C have not had a fully independent hearing, New Democrat Hydro critic Adrian Dix said.

"[The JRP's] work was based on BC Hydro's work," he said. "The government themselves are playing games with the math here, and they won't allow their assumptions to be tested in the way the law suggests they be tested [by the utilities commission.]"

Without further scrutiny, LNG demand "becomes a matter of opinion," he said.

The review panel called LNG "the biggest wild card" in forecasting the need for Site C.

Nineteen companies are in the mix to export LNG from gas fields in Northeast B.C. to Asian markets, though none has made a decision to invest.

Liquefying natural gas takes tremendous amounts of power — as many as 700 megawatts in some proposals.

Each proposal differs on where it plans to get that energy.

The review panel notes that gas developers have been given a "free hand" to burn their own gas to power their operations — meaning it's less likely projects will hook into the BC Hydro grid.

A gas-powered LNG industry "would make provincial (and national) greenhouse gas targets all but impossible to reach," the panel concluded.

Some projects do intend to use power from BC Hydro.

According to the ministry spokesperson, three LNG projects using the B.C. grid (LNG Canada, Woodfibre LNG and an upgraded Tilbury Project in Delta) would exceed Hydro's 3,000 gigawatt-hour projection.

Woodfibre plans to run its 1,300 gigawatt liquefaction plant on the BC Hydro grid for environmental reasons, according to a spokesperson.

However, many proponents hope to be liquifying and exporting natural gas well ahead of Site C's in-service date.

Around 20 B.C. local governments, including the PRRD, have asked BC Hydro to send Site C to the BCUC, which is tasked with regulating utility rates.

Many claim the BCUC would better evaluate the economics behind Site C.

When announcing the decision to go ahead with the project, the province delayed construction — which had been slated to begin this winter — to summer. 

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